The National Insurance & Guarantee v Corporation Ltd v Young & Anor

An arbitration agreement does not prevent a party from commencing court proceedings before applying for a stay. Once a valid application is made under Arbitration Act 1996, a stay will ordinarily follow, subject to the statutory exceptions. Pending that application, the court may grant urgent interim relief where the statutory conditions are met. In arbitration-related proceedings, the court may make orders preserving property, evidence or assets under section 44(3) in a case of urgency. The court should assess urgency and the balance of convenience on the evidence, and may act before an arbitral tribunal has been constituted.

The claimant insurer sought an interim injunction against its former agent, which had issued after-the-event insurance policies and continued to handle existing claims under a delegation agreement. The agreement contained an arbitration clause. The claimant alleged material breaches, terminated the agreement and sought delivery and preservation of policy records and associated documents.

The defendant contended that the proceedings should be adjourned because it intended to apply for a stay under section 9 of the Arbitration Act 1996, and that equivalent relief would not be available under section 44. The central issues were whether the court could grant interim relief before a stay application and whether the circumstances constituted urgency for the purposes of section 44(3).

1. Interim injunction granted. The claimant had a very strong prima facie case of material breaches and failure to remedy them after request. The injunction was granted in both substantive parts sought, subject to the form of order and consequential matters.
2. The arbitration clause did not make the commencement of the court proceedings impermissible. Recourse to arbitration was not compulsory merely because the agreement provided for arbitration. However, once a valid application for a stay was made under section 9 of the Arbitration Act 1996, the court could be expected to grant the stay in the absence of the statutory exceptions. Such an application had to be made after acknowledgement of service but before any further step in the action.
3. The claim included an arguable tort claim concerning conversion of documents, in addition to contractual matters. The documents were strongly arguable as the claimant’s property because they constituted, evidenced or were closely ancillary to contracts made by the claimant through the defendant as agent. The contractual reference to a lien and unrestricted access did not sensibly make the records the defendant’s property after the defendant became unable or unwilling to perform the agreement.
4. If the injunction fell within the arbitration-related statutory regime, section 44 of the Arbitration Act 1996 was relevant. Section 44(3) permitted urgent orders necessary to preserve evidence or assets. This was not a section 44(4) case because there was no agreement between the parties and no arbitral tribunal had been constituted.
5. The circumstances were urgent. The claimant lacked knowledge of many policies, and policyholders faced attempts to enforce litigation costs which the insurance was intended to cover. Rapid management and resolution of those claims was required. The balance of convenience therefore favoured immediate relief rather than waiting for the stay application or an arbitration claim. The defendant was protected by the undertaking in damages.

First-instance decision on an application for an interim injunction. The court granted the injunction and directed that the parties be heard on the form of order and consequential matters.